Addressing Maine’s energy problem

Beth Nagusky, state government’s director of the Office of Energy Independence and Security, in her op-ed published in the Bangor Daily News of Aug. 30, states that Maine, in contrast to the United States, is on the right energy course.

She touts state government policies promoting energy conservation, energy efficiency and renewable energy as the solution to our problems; as opposed to the federal government’s failure to take the energy crisis seriously. She belittles any potential benefits from the recently passed federal energy bill. She boasts “big strides were made in the 1970s in response to an oil embargo and we can do it again.”

Maine’s energy policy, dating from about 1980, has focused on electric conservation and renewable electric generation. Our electric utilities, being heavily regulated by the state, have been used as a convenient vehicle to implement the policy. Electric conservation subsidies and renewable electric generation mandates were funded by increasing electric prices. Maine electric prices increased relative to the United States by about 50 percent since 1980.

As electric prices increased, customers reduced or limited their consumption of utility provided electricity and instead increased their consumption of gas and oil, directly or via self-generation of their own electricity. The recent Eastern Maine Medical Center and University of Maine self-generation projects are the most recent examples.

These actions by consumers caused electric prices to increase even more, as much of electric utility costs are fixed and needed to be recovered over a smaller base of sales. In turn, in response to the ever higher electric prices, further reductions in electric consumption and increases in gas and oil consumption occurred as the cycle continued. In the interim, proposals to construct a new, large coal-fired plant at Sears Island and to purchase power from Hydro-Quebec were turned down by the Maine Public Utilities Commission, hydro power projects were abandoned and Maine Yankee was shutdown, all replaced by gas-fired power plants.

With due respect, Maine has not made great strides with respect to its energy policy. It’s energy problem is its high and increasing use of petroleum related fuel. Despite the intervention by state government in our energy industry as described above, Maine has substantially increased its reliance on petroleum based fuels and now is even more vulnerable to their high and volatile prices. For example, according to the U.S. Office of Energy Information Administration, Maine’s use of petroleum and natural gas increased by about 67 percent from 1980 to 2001 (latest year for which data is available) compared to an increase of only 12 percent in all of the nation.

Maine now consumes about 20 percent more per capita than the U.S. Maine does not seem to have made the strides that Nagusky claims. And, with the recent run-up in petroleum and natural gas prices, Maine citizens are paying a high price for the actual consequences of its energy policy.

There is nothing wrong with considering all energy options, including those promoted by Nagusky and her associates. Energy conservation, energy efficiency and renewable energy resources can all be economic solutions to the problem of high energy prices and a component of consumers’ energy portfolios. However, if pursued using government subsidies and mandates as in the past, these options will be unreasonably expensive and make the problem worse.

Instead, the policy should be to eliminate subsidies and mandates which will lower the price of electricity and to market electricity to end-users who would otherwise consume high cost oil and gas. This would reverse the course of the past 25 years, causing electric demand to increase and further reductions in its price. With lower electric prices consumers will use more electro-technology, such as advanced heat pumps, fuel cells and other energy efficient end-use technology, effecting overall reductions in the use of oil and gas.

The increased demand for electricity could be met in the short-term from existing efficient gas-fired generators and over time with new, clean coal technology, nuclear power, and economically viable hydro, wind and biomass generation. And, if Maine means business, it will quickly eliminate the current electric subsidies and mandates and reduce electric prices accordingly. A 5 percent savings would translate into about a $50 million benefit.

While this energy policy may not pass the politically correct test in Maine, I submit that it is a mainstream policy for much of the U.S. and the world and will maximize the benefits of conservation, efficiency and renewables. Consider that 60 percent of the electric generation in the United States is coal-fired and 20 percent is nuclear. France generates most of its electricity with nuclear energy.

The fact is, providing energy using greater amounts of electricity offers many options for reduction in the use of oil and gas and for increasing energy efficiency, which Maine surely needs. The current policy has failed to accomplish its objectives. A new policy based upon increased electrification is needed.

Carroll Lee, of Brewer, is the former president and chief operating officer

of Bangor Hydro.